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Title:Structural estimates of the intergenerational education correlation PDF Logo
Authors:Belzil, Christian
Hansen, Jörgen
Issue Date:2003
Series/Report no.:IZA Discussion paper series 973
Abstract:Using a structural dynamic programming model, we investigate the relative importance of family background variables and individual specific abilities in explaining cross-sectional differences in schooling attainments and wages. Given scholastic ability, household background variables (especially parents' education) account for 68% of the explained crosssectional variations in schooling attainments. When the effects of household background variables on ability are also taken into account, the percentage raises to 85%. However, individual differences in wages are mostly explained by abilities. Only 27% of the explained variation in wages is accounted for by parents? background variables as opposed to 73% by unobserved abilities (orthogonal to family background variables). When scholastic ability is correlated with family background variables, ability endowments explain as much as 81% of individual wages.
Subjects:intergenerational education correlation
endogenous schooling
household characteristics
dynamic programming
JEL:J3
J2
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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